Author Archives: Daily Market Report

Gold hovers around $1500, a venerable firm’s ‘distinctive philosophy around gold’

(USAGOLD – 9/20/2019) – Gold continued to hover around the $1500 mark this morning with little in the way of news on the economic front to push it decidedly in one direction or the other.  It is up $1 at $1501.  Silver is up 2¢ at $17.82.  The Fed will make a fourth $75 billion cash injection into the repo market black hole this morning. Today stock traders will be confronted with quadruple witching – an event that at times generates heavy spikes in derivative trading and volatility.

Despite the gold market’s muddle over the past several weeks, it is still up 17% thus far this year. Analysts, generally speaking, are split on metal’s future direction. Some see it as clinging precariously to these levels and unlikely to hold. Others see it as consolidating for the next move higher. As for us, we go along with something First Eagle Investment Management’s Thomas Kertsos said in an interview at Gold Hub released earlier this morning. First Eagle, a venerable Wall Street firm that has been in the investment business since the 1860s, has more than $100 billion under management and 5% to 15% is allocated to gold and gold-related securities.

“We have a distinctive philosophy around gold,” he says. “We believe gold has unique risk/reward characteristics that enable it to help preserve real value over the long term. We use gold as a potential hedge and do not speculate on its price over the next six to 12 months. We believe it is not possible to forecast the price of gold or, for that matter, the price of other investment assets. This, in fact, is why we have a potential hedge . . .”

Silver, by the way, is up 15% year to date.

Quote of the Day
“Markets may have rallied on Donald Trump’s potential trade ‘deal’ with China, but the corporate world isn’t buying it. That’s one of the key points I took away from several days spent last week at a summit for global chief executives. They were busy preparing for a new world order that many believe will involve a stand-off not between two countries (the US and China) but between three systems — liberal democracy and free markets, state-run capitalism and cyber-libertarianism.” – Rana Foroohar, Financial Times

Chart of the Day

The biggest foreign holders of U.S. debt


Click to
enlarge. Chart courtesy of HowMuch.net

Chart note: “The total amount of treasury securities issued to foreign countries is $6.433 trillion,” says HowMuch.net. “China currently holds the most U.S. debt due to a variety of factors, including China’s desire to keep the yuan weak compared to the dollar. Most of the treasury securities held by other countries are in the form of treasury notes and bonds, rather than treasury bills. The top five countries in the visualization (China, Japan, Brazil, United Kingdom, and Ireland) account for almost half of the treasury securities held by foreign countries.”

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold regains its footing as Fed pumps another $75 billion into repo market

(USAGOLD – 9/19/2019) – Gold regained its footing after yesterday’s FOMC-related sell-off – up $12.50 in today’s early going at $1504.  Silver is up 21¢ at $17.90.  The Fed plans to pump another $75 billion in cash into the repo market today “to restore order in the banking system,” as Bloomberg put it their early market report. The metal dipped to a $1485 low during Asian trading hours but recovered quickly as news of a third day of Fed rescue operations sunk in and the Paris-based OECD warned of “entrenched uncertainty” in the global economy. The safe-haven trade, in short, returned to the forefront.

We are reminded in all of this of a recent quote from Financial Times‘ Rana Forooha. “What comes next?” she asks. “The answer, I believe, is very likely to be a synchronised global recession, punctuated by a step-by-step market downturn — one in which there may be the odd rally, but the general direction is down. This could last for some years. In the next few weeks, I would expect new lows in bond yields, a deepening of the yield curve inversion, higher prices for ‘safety’ assets like the yen and Swiss franc, and a continued bull market in gold.”

Quote of the Day
“Rather than let the market adjust itself, government typically starts the process all over again with a new and larger ‘stimulus package.’ The more often this happens, the more ingrained become the distortions in the way people consume and invest, and the nastier the eventual depression. This is why I predict the Greater Depression will be … well … greater. This is going to be one for the record books. Much different, much longer lasting, and much worse than the unpleasantness of 1929-1946.” – Doug Casey, International Man

Chart of the Day

Chart note: This chart compares price appreciation for gold and the dollar index. Gold has consistently outperformed the dollar in twelve of the last eighteen years – a formidable record. Even if one were to add in average yields on dollar-based investments, gold still comes out the clear winner in those twelve years. Gold had an off-year in 2018 – down 1% while the dollar was up almost 7%. So far in 2019, though, gold has returned to form with a more than 16% gain thus far this year (through September 13, 2019).

 

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold trading quietly this morning despite Fed repo market rescue operation

(USAGOLD – 9/18/2019) –  Tempered by uncertainty over the results of today’s FOMC meeting, gold is trading quietly – up $3 at $1504.  Silver is down 9¢ at $17.92. The quiet though could give way to more volatility later today as the market sorts out the impact of the Fed’s cash rescue of the overnight repo market (Please look for details at our Live Daily Newsletter). According to early press reports, analysts and long-time market participants are concerned that Fed cash injections might be needed on a “regular basis.” In other words, the Fed suddenly might be forced to reintroduce some version of the quantitative easing programs that followed the 2008 financial crisis – a prospect that could add an interesting twist to the Fed’s deliberations today. Those policies, we should add, played a central role in gold’s push to all-time highs over $1900 per ounce.

Quote of the Day
“An ounce of gold cost $271 in 2001. Ten years later it reached $1,896—an increase of almost 700 percent. On the way, it passed through some of the stormiest periods of recent history, when banks collapsed and currencies shivered. The gold price fed on these calamities. In a way, it came to stand for them: it was the re-discovered idol at a time when other gods were falling in a heap of subprime mortgages and credit default swaps and derivative products too complicated to even understand. Against these, gold shone with the placid certainty of received tradition. Honored through the ages, the standard of wealth, the original money, the safe haven. The value of gold was axiomatic. This view depends on a concept of gold as unchanging and unchanged—nature’s hard asset.” – Matthew Hart, Vanity Fair

Chart of the Day

Chart note:  We ask the indulgence of our regular readers who have seen this chart before. We have had quite a few new visitors over the past few weeks looking into gold for the first time, and this chart more than any other, we feel, is central to understanding why gold continues to make sense as a long-term portfolio holding. When the United States abandoned the gold standard in 1971 and freed currencies to float against one another, the fiat money era began. We are still in that era today. This chart shows the performance of gold from the early 1900s to 1971 when gold backed the dollar, and the era from 1971 to present when it did not. Gold has had its ups and downs since 1971, but clearly, over the long run, in the absence of an official gold standard, individual investors have been well-served by putting themselves on a private gold standard.

 

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold pushes back over $1500; markets still up in the air on Abqaiq strike, aftermath

(USAGOLD – 9/17/2019) – Gold pushed back over $1500 this morning despite oil prices taking a breather following yesterday’s record surge.  It is up $6 on the day at $1504.  Silver is up 3¢ at $17.87. Gold’s modest uptick might be an indicator that the markets are still digesting the full impact of the drone strike on Saudi oil facilities on Saturday. In a Gold Hub column, Adam Periaky lists four potential gold price drivers for the rest of the week: Concerns about retaliatory actions to the attack on the Abqaiq complex; rate decisions from the FOMC, BOE and BOJ; meetings between the UK and the EU over Brexit; and one largely overlooked upcoming event – quadruple witching hour for stocks and indices on Friday. The FOMC meeting begins today.

Quote of the Day
“Gold has always been seen as an important diversifier in an investor’s portfolio, both as a hedge against inflation and equity fluctuations. However, investors should start thinking of gold as an Alpha generator in their portfolios. Gold’s technical picture has changed this year, and I strongly believe it is set to embark on a multi-year uptrend.” – Greenwood Investments, Seeking Alpha

Chart of the Day

Chart note: This long-term chart on the annual average price of gold since 1970 dispels the notion that gold is somehow volatile or unpredictable and as a result unreliable as a long-term portfolio safe haven. To the contrary, it shows gold living up to its reputation as a portfolio safe haven during times of rapidly changing economic circumstances.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold surges overnight on Saudi drone attack, levels off in early COMEX trading

(USAGOLD – 9/16/2019) – Gold surged overnight as markets weighed the potential outcome of the drone attack on Saudi Arabia’s key oil processing facility on Saturday.  The headline to a Bloomberg article this morning summed up the impact on the gold market:  Gold rallies on concern Saudi attack may presage wider conflict.  In the past, we have featured four major concerns in these reports underpinning and driving gold demand – recession fears, central bank interest rate policies, the trade wars and competitive currency devaluations. To that already formidable list, the markets will now add a fifth – the possibility of expanded conflict in the Persian Gulf.

Gold and silver have leveled as COMEX opens.  Still, gold is up $14 over Friday’s close.  Silver is up 39¢ at $17.82.  Brent crude, by the way, is up about 10% (+$6.30) at $65.80 and the dollar index is up sharply as well.

This morning’s headlines pushed another important event for the week into the background – the Fed meeting on Tuesday and Wednesday.  Historically gold and silver tend to retreat in advance of FOMC meetings.  Given the volatile circumstances in the Persian Gulf, that might not be the case this week.

Quote of the Day
What a difference a few years makes. Back in the summer of 2015, a WSJ op-ed writer,  who somehow was unaware of the past 6,000 years of human history, infamously and embarrassingly said ‘Let’s Be Honest About Gold: It’s a Pet Rock.’ Fast forward to today, when with every central bank once again rushing to debase its currency in what increasingly appears to be the final race to the debasement bottom, when even BOE head Mark Carney recommends that it is time to retire the dollar as the world’s reserve currency, pet rock gold has emerged as the second best performing asset of the year… and at the rate it is going – 4th in 2017, 3rd in 2018, 2nd in 2019 – gold will be the standout asset class of 2020.” – Tyler Durden, ZeroHedge

Chart of the Day

Chart note:  It has been a good year thus far for gold and silver.  Gold is up 16.1%  since the beginning of 2019 and silver 12.8%.  Silver is still in catch-up mode with its ratio to gold now sitting just under 85.5 to one. This chart reflects London pricing and does not include Friday’s weaker U.S. close near $1489 for gold and $17.42 for silver.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold specs sharply pare bullish bets after close to 3-year high

Through Tuesday, September 10, 2019
Charts and commentary courtesy of CountingPips.com
Tables courtesy of GoldSeek

Note: Commitment of Traders reports are published Friday with data from the previous Tuesday.


Gold Non-Commercial Speculator Positions:

Large precious metals speculators sharply cut back on their bullish net positions in the Gold futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Gold futures, traded by large speculators and hedge funds, totaled a net position of 269,725 contracts in the data reported through Tuesday September 10th. This was a weekly reduction of -30,822 net contracts from the previous week which had a total of 300,547 net contracts.

The week’s net position was the result of the gross bullish position (longs) dropping by -31,271 contracts (to a weekly total of 334,114 contracts) while the gross bearish position (shorts) fell by just -449 contracts for the week (to a total of 64,389 contracts).

Gold bullish bets dropped this week by the largest amount in sixteen weeks after rising above the +300,000 net contract level last week. That was the first time bullish bets had been above that level since September 6th of 2016, almost exactly three years prior. Gold bullish bets have been on a remarkable run since this year’s low-point on April 23rd when the net position stood at just +37,395 contracts. Since that time, just twenty-one weeks ago, bullish positions have exploded higher by a total of +232,330 net contracts and have risen in fourteen out of the twenty weeks following the low.

Gold Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -305,611 contracts on the week. This was a weekly rise of 32,130 contracts from the total net of -337,741 contracts reported the previous week.

Gold Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Gold Futures (Front Month) closed at approximately $1499.20 which was a decrease of $-56.70 from the previous close of $1555.90, according to unofficial market data.


Silver specs edged bullish bets lower 1st time in 4 weeks

Silver Non-Commercial Speculator Positions:

Large precious metals speculators slightly trimmed their bullish net positions in the Silver futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Silver futures, traded by large speculators and hedge funds, totaled a net position of 60,231 contracts in the data reported through Tuesday September 10th. This was a weekly reduction of -1,894 net contracts from the previous week which had a total of 62,125 net contracts.

The week’s net position was the result of the gross bullish position (longs) falling by -4,564 contracts (to a weekly total of 100,413 contracts) while the gross bearish position (shorts) declined by a lesser amount of -2,670 contracts for the week (to a total of 40,182 contracts).

The Silver speculative bets dipped this week following three straight weeks of gains that had added over +22,000 contracts to the overall net bullish position. Speculator sentiment has risen for ten out of the past fifteen weeks that has taken the net position from a total of -8,443 contracts on June 4th to a total of +60,231 contracts as of this week. Despite the small pullback, this week marked the first time since November of 2017 that the net position has been above +60,000 contracts for two straight weeks.

Silver Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -84,768 contracts on the week. This was a weekly decrease of -90 contracts from the total net of -84,678 contracts reported the previous week.

Silver Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Silver Futures (Front Month) closed at approximately $1818.60 which was a loss of $-105.10 from the previous close of $1923.70, according to unofficial market data.


Specs add to US Dollar Index bullish bets

US Dollar Index Speculator Positions

Large currency speculators continued to raise their net bullish positions in the US Dollar Index futures markets this week while speculators also boosted their Japanese yen positions, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of US Dollar Index futures, traded by large speculators and hedge funds, totaled a net position of 32,032 contracts in the data reported through Tuesday September 10th. This was a weekly gain of 296 contracts from the previous week which had a total of 31,736 net contracts.

This week’s net position was the result of the gross bullish position (longs) dropping by -4,927 contracts (to a weekly total of 49,483 contracts) compared to the gross bearish position (shorts) which saw a decrease by -5,223 contracts on the week (to a total of 17,451 contracts).

US Dollar Index bullish bets edged higher for a third straight week and have now risen in nine out of the past eleven weeks. This week’s gain brings the USD Index position to the most bullish level in twenty-six weeks dating back to the middle of March.


*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).
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Posted in COT Reports |

Federal Reserve intervention in repo market a step towards more QE

FT/Michael Mackenzie/9-18-2019

“The Federal Reserve Bank of New York has a well-earned reputation for fighting fires in financial markets, particularly in the arcane and crucial realm of short-term funding for banks and investors.”

USAGOLD note:  We mentioned the possibility of a new round of QE in yesterday’s DMR.  Here is a more detailed look on how and why that could happen.

Posted in Today's top gold news and opinion |

Gold seesaws around the $1500 mark; a new and important gold market dynamic

(USAGOLD – 9/13/2019) – Gold continued to see-saw around the $1500 mark this morning following yesterday’s volatile performance.  It is now up $3 on the day at $1501.  Silver is level at $18.07. As was the case yesterday, gold gained ground during European trading hours. It then gave up some of those gains early in the U.S. trading session. Gold demand in Europe has been strong in the wake of the ECB’s decision to lower rates and relaunch its sovereign debt-buying program.

Competitive devaluations, along with trade and ‘de-dollarization’ concerns, continue to fuel institutional investor thinking and encourage physical gold demand. “Another element lending support to the gold price this time around,” says Sharps Pixley‘s Lawrie Williams, “is that some big names in the institutional sector, like Ray Dalio, have been singing gold’s praises which should mean there is good institutional support this time around. Indeed the recent downwards moves in precious metals prices look very much like overdue corrections, from which prices will likely recover and go on to new highs.” Funds, institutions and central banks are three players largely absent in previous bull market rallies going all the way back to the early 1970s – a circumstance that introduces a new and important dynamic to present-day gold market analysis.

Quote of the Day
“My time horizon is that I usually measure moves like these in terms of decades. So let’s look at it like this: The first move, the first leg, in gold took it from $250 per ounce to $1900. . .We’ve now been in a correction that has taken gold from $1900 back to where we are today. You could easily see gold fall a couple of hundred dollars before you see it go up a couple of thousand dollars, but each move has been a decade or more which means that when gold embarks upon its next move, I believe that you will see that long wave will take gold relatively quickly to the $3000 to $5000 target that I believe is fundamentally justified based on the facts we have today.” – Thomas Kaplan, The Electrum Group (Bloomberg interview, 5/29/2019 – Gold was trading just below $1300 per ounce at the time.)

Chart of the Day

Published with permission of Pew Research Center

 

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold surges in surprise overnight move – up $25 and back over $1500

(USAGOLD – 9/12/2019) – A surprise greeted U.S. gold owners to start the day – the yellow metal surging $25 higher overnight and vaulting back over the $1500 mark at $1518.  Silver is up 14¢ at $18.24.  The move comes courtesy of the European Central Bank which lowered rates overnight and relaunched quantitative easing to the tune of €20 billion per month.  European investors responded with a wave of gold and silver buying.  Needless to say, the ECB’s dovish move will pressure the Fed to match it with some easing of its own. Though a Fed version of QE is not in the works at the moment, the ECB decision will cause a good many on Wall Street to think that it paves the way for something similar in the United States down the road. POTUS took note of the ECB’s dovish ways in a tweet while keeping the pressure on the Fed which he complained “sits, sits, sits.”

“At this stage, the gold market believes the US central bank will deliver a neutral cut, ” says TD Securities Bart Melek in an FXStreet article, “with no unqualified commitments to cut rates aggressively. . .Germany is showing weakness due to trade, China is continuing to disappoint and there are signs that the US is also slowing. Given these facts on the ground and the fact that monetary policy is not very productive, the projected declines in gold should be seen as a buying opportunity, as central banks will need to be aggressive in their monetary action to overt a sharp decline in global activity next year.”


Chart courtesy of TradingView.com (indexed to 100)

Quote of the Day
“While many of the remaining ‘gold bears’ and those who claim that ‘gold’s rise is basically behind us’, they are mostly the same folks who said the same at $1,200 and who also claimed that gold was going under a $1,000 too. Words like ‘relic’ were common in their description of gold, and many of them even claimed that bitcoin and cryptocurrencies were the ‘new gold’. How’s that working out for them?”Peter Grandich, Peter Grandich and Company

Chart of the Day

Chart courtesy of HowMuch.net

Chart note:  “The U.S. Dollar makes up 61% of all central bank foreign reserves,” says How Much, “making it the most popular and powerful currency in the world. The total value of all currencies held in foreign exchange reserves is equal to nearly $11 trillion. The U.S. Dollar also dominates the forex trading market and is involved in about 90% of all forex trading. The Euro and U.S. Dollar make up over 80% of the world’s currency reserves. Despite being a large part of global trade, the Chinese Renminbi makes up less than 2% of global currency reserves.”

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold drifts higher, Citigroup says $2000 possible in next year or two

(USAGOLD – 9/11/2019) – Gold drifted higher this morning without much conviction and in the absence of any news of consequence.  It is trading at $1490 – up $3 on the day.  Silver is up 5¢ at $18.06.  Gold has lost 4.2% since reaching an interim high of $1555 three weeks ago. Silver losses are more pronounced having fallen 7.8% from its $19.60 high earlier this month. Many analysts see this correction, though, as a healthy one reflecting normal profit-taking rather than something more enduring.

Citigroup is one that positions itself on bullish side of the gold ledger. In a client note issued yesterday, it forecasted “spot gold prices to trade stronger for longer, possibly breaching $2,000 an ounce and posting new cyclical highs at some point in the next year or two.” In a Bloomberg article, it cites the familiar list of market drivers – low real interest rates, recession risks, the trade wars, geopolitical tensions, etc. – and says “the Fed will ultimately end up cutting rates all the way to zero.”  At $2000 per ounce – a number predicted by some analysts for the not too distant future – gold would surpass the record highs achieved in the aftermath of the 2008 financial crisis.

Quote of the Day
“Central banks and Basel III have more or less removed price discovery from the credit markets, meaning risk does not have an accurate pricing mechanism in interest rates anymore. And now passive investing has removed price discovery from the equity markets. The simple theses and the models that get people into sectors, factors, indexes, or ETFs and mutual funds mimicking those strategies — these do not require the security-level analysis that is required for true price discovery. This is very much like the bubble in synthetic asset-backed CDOs before the Great Financial Crisis in that price-setting in that market was not done by fundamental security-level analysis, but by massive capital flows based on Nobel-approved models of risk that proved to be untrue.” – Michael Burry, Scion Asset Management (Bloomberg interview – 9/4/2019)

Chart of the Day

Chart note: “Central banks,” says the World Gold Council, “held 34,000 tonnes of gold, as of Q1 2019 according to IMF data, making gold the third largest reserve asset in the world. Gold is generally considered to be a strategic asset that can be deployed for both short-term liquidity management and as a store of value over time. It is an asset that is well suited to meeting central banks’ strategic objectives of: safety, liquidity and return.”

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold dips below $1500 in Asia, recovers in early U.S. trading

(USAGOLD – 9/10/2019) – Gold dipped below the $1500 mark early in the Asian trading session. It fell to a low of $1490 at one juncture as traders booked profits and the safe-haven trade took a breather. That weakness dissipated at the COMEX open, though, where the precious metal is now trading level on the day at $1496.50. Silver is trading at $17.99 – up 3¢ on the day.

A number of technical analysts have warned that a short-term correction in the gold price is overdue. “Gold bulls,” says Market Pulse in an Investing.com report, “may finally be conceding defeat after repeated tests of the $1,520-1,560 range failed to produce a breakout. This has historically been a major area of support and resistance for the yellow metal so when momentum started to slip on approach to it again, it was clear it was in for a tough test.” Repeatedly during this rally, which began last May at $1275-1285 per ounce, the gold market has encountered overhead resistance that required more than one attempt to crack.

As Market Pulse points out, $1550 is a big test but so were $1400 and $1500. In the current environment, the right combination of news and central bank maneuvers can exert a more pronounced influence on day-to-day pricing than arbitrary technical targets. In the recent past those markers have been pushed aside with little more than a presidential tweet or some casual remark from the Fed chairman.

Quote of the Day
The problem is… the global bond market is now in excess of $115 trillion (a very very big number) and its grown dramatically since the 2008 crisis. It’s just about tripled according to one set of numbers I looked at. When the bond market crunch comes, let’s assume there will be some very very large losses – and all the systemic bad consequences that will go with that.  Worry less about how index funds, or ETFs will trigger the next crisis, but what happens when bond markets collapse on a few points of interest rate rises, triggering massive defaults, while chronic illiquidity creates the biggest value trap of all time.Bill Blain, Blain’s Morning Porridge

Chart of the Day

Chart note:  For those exploring the virtues of gold ownership, today’s Chart of the Day is illustrative. Gold has provided a positive return in 15 of the last 19 years. It is up 18.5% thus far in 2019 (through August 30).

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold on the mend early, Mobius says physical the way to go

(USAGOLD – 9/9/2019) – Gold is on the mend this morning after once again finding support near the $1500 level.  It is now up $7.50 on the day at $1514.  Silver is level on the day at $18.20.  Both metals, which were on a tear through the usually slow summer months, corrected from highs at $1555 and $19.60 respectively. Thus far, though, speculators short the market and investors looking for a clear point of entry have embraced any weakness as a buying opportunity – particularly when gold trades near the $1500 mark. Four pressing concerns continue to drive demand for the metals in both paper and physical forms – recession fears, plunging interest rates, the U.S.-China trade war, and competitive currency devaluations.

Mark Mobius, the widely-followed market analyst, has been very vocal of late on the merits of gold ownership recommending that investors allocate 10% of their portfolios to the metal. “Physical gold is the way to go, in my view, because of the incredible increase in money supply,” he told CNBC’s “Street Signs” on Friday. “All the central banks are trying to get interest rates down, they are pumping money into the system. Then, you have all of the cryptocurrencies coming in, so nobody really knows how much currency is out there.”

Quote of the Day
“Bull markets can be classified as either secular (long term) or cyclical (bull phases within an overall bear market). Before its $1,400 per ounce breakout in June, gold appeared to be tracking, on a technical basis, similar to its 36-month cyclical bull market from 1993 to 1996. However, its current $1,500 price level hints at a potentially longer, sustained rally—perhaps more similar to the secular gold bull market of 2001 to 2008.” – Joe Foster, Van Eck Securities

Chart of the Day

Chart note: Historically, gold and the dollar have travelled in opposite directions.  Since this past July, though, as a consequence of the U.S.–China trade war, the two have risen in tandem as investors adjust their portfolios to a more defensive posture.  Gold, silver and bonds, likewise, have been beneficiaries of the trend. Gold is up 18.5% through August.  Silver is up 18.8% over the same period and the 10-year Treasury yield has gone from 2.66% to 1.5%.  The Dollar Index, a measure of the greenback’s value against a basket of currencies, has risen from 92 to 99 – up 7.6%.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold retreats overseas, regains footing in early U.S. trading

(USAGOLD – 9/6/2019) – Gold retreated another $13 in overseas markets last night but then regained its footing at the COMEX open. It is now priced at $1518 – down just $1 on the day.  Silver is up 3¢ at $18.72. This morning’s weaker-than-expected jobs report helped to reverse gold’s overnight downtrend. It looks, at least for the moment, like the trend we have seen in place over the past several weeks of buyers coming into the market on the dips remains intact. Many market analysts see central bank demand as the psychological bulwark underpinning the market. It keeps domestic production at home in the number one and number three producers – China and Russia. It also diverts available physical supply to other, mostly emerging countries making an effort to build their reserves.

Writing for the South China Morning Post, Joshua Rotbart, managing director of Hong Kong’s J. Rotbart & Co. says: “Gold provides stable insurance against a weaponised US dollar. By hedging their portfolios with gold, Russia and China – especially China, given current events – can manoeuvre with wider geopolitical freedom. As the ‘de-dollarisation’ continues, expect more purchases by central banks, especially considering that gold consists of only 2.5 per cent of China’s foreign reserves, but over 75 per cent of US foreign reserves. How the currency war, in conjunction with the trade war, will unfold remains unclear. What is clear is that gold bullion – physical gold – is back in fashion among many central banks as a suitable substitute for fiat currencies that wield too much geopolitical muscle.”

Quote of the Day
“Bear markets are sneaky beasts and they like to do their damage as secretly and as unobtrusively as possible. I hate to say it but somewhere ahead, the bears going to get it all together and the innocent little stream is going to turn into a waterfall. What can you do about it? Stay out of the market? Protect yourself by remaining in pure wealth, gold. For thousands of years, silver and gold have been treated as pure wealth. As the standard measures of wealth (stocks and bonds) have deteriorated, veteran investors have forgone profits and moved their assets into pure wealth.” – Richard Russell, Dow Theory Letters

Chart of the Day

Chart courtesy of HowMuch.net

Chart note: “It’s no secret,” says HowMuch, “that $1 now will get you less than it would 100 years ago, but just how much has the purchasing power of the U.S. Dollar decreased over the years? To illustrate this, we created a visualization that demonstrates the rise and fall of the dollar since 1913. Using this graphic, we can see how inflation and changes in the Consumer Price Index have decreased the dollar’s purchasing power over the last century.

• $100 in 1913 would only be worth about $3.87 today.

• While the purchasing power of the dollar has gone up and down since 1913, it has never surpassed the purchasing power it had in 1913.

• The purchasing power of U.S. citizens has always topped the charts, but that could be changing in the future.

• Inflation impacts nearly all variables of macroeconomics, and many believe that current U.S. inflation levels are too low.”

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

DMR AFTERNOON UPDATE – Gold slammed $33 lower, silver 84¢

(USAGOLD – 9/5/2019) – As suggested in this morning DMR, both metals appeared poised for some corrective action. Gold is now trading at $1518.50 – down $33. Silver is down 84¢ at $18.73.  Pent-up selling pressure made its presence known today. As has been the case historically with gold, it took the stairs up and is taking the elevator down. Investing.com cites Saxo Bank’s Ole Hansen as saying that a “bearish double-top” had formed around $1,555. He sees $1517 as the “key support level near in the near term, but said it was “unlikely to be breached unless the 10-year Treasury yield rose back above 1.55%.”  We got to that $1517 level in a hurry. Whether or not it will hold, remains to be seen.


(Posted for information purposes only with the usual caveat that anything can happen and that we are not offering investment advice.)


Posted in Today's top gold news and opinion |

Gold pushes over the $1550 mark overnight then drops

(USAGOLD – 9/5/2019) – Gold pushed over the $1550 mark during Asian trading hours to near $1556 at which point in went into a stall then dropped.  It is now trading at $1536 – down $15 on the day.  Silver is down 40¢ at $19.19.  Both metals, which have been on a tear through the summer months, seem poised for some corrective action.  Thus far, though, speculators short the market and investors looking for a clear point of entry have embraced any weakness as a buying opportunity.

Looking around for a cause beyond the technical considerations for today’s downside, we can point to the announcement that trade talks between the U.S. and China will resume in October. As we have seen consistently over the past many months, though, market optimism on the matter can quickly turn to pessimism with a one or two-sentence presidential tweet.

“The correlation between gold and the dollar,” says ANZ’s head of research, Khoon Goh, in an interview India’s Economic Times, “has broken down clearly for this reason.* Normally when the dollar is strong, gold prices will be weaker but in this environment, central banks around the world are easing and everyone wants a weaker dollar. Gold prices are reflecting concerns about fear of currency debasement. There is only further upside for gold in the environment that we are in at the present.”

* A formal U.S. government intervention to weaken the dollar

Quote of the Day
“The ‘threat’ is best seen through the emergence of exchange-traded funds (ETFs), which allow investors to get a proxy physical gold exposure through an investment via their stockbroker. In truth, these products are, in many cases, more expensive than trading and storing physical gold (especially for larger investors with a long-term investment time frame), have less trading flexibility, and are less secure than owning real physical gold.” – Jordan Eliseo, ABC Bullion/Australia

Chart of the Day

Chart note:  The spike you see at the farthest right of the long-term chart of gold has elevated optimism in some quarters that the long side-ways, see-saw market has come to an end. Since the late May bottom at $1277, gold is up almost 20%.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold turns back from $1550 level second time in 10 days

(USAGOLD – 9/4/2019) – Gold turned back from overhead resistance at the $1550 level for the second time in ten days during Asian trading hours last night.  At the COMEX open, it is down $6 at $1543. Silver is up 10¢ at $19.46 following up on yesterday’s 75¢ gain. A plunging yen and Hong Kong’s full withdrawal of the extradition bill at the heart of violent protests over the past several weeks sent gold lower in Asia – at one point by almost $20 per ounce. That weakness carried over to the European market but appears to be losing momentum early in the U.S. session.

In the recent past, aggressive physical demand and short covering have cut pullbacks short. The World Gold Council this morning reports “COMEX net longs mov[ing] to all-time highs of long 1,124 tonnes, driven by Money Manager net longs, also at all-time highs. Gold finished the month up 7% and is higher 19% this year, outperforming all major indices (including oil), except the Nasdaq on the year.” Traders will be watching closely to see if this sell-off generates a similar wave of both physical and paper gold demand.

Chart courtesy of the World Gold Council

Quote of the Day
“If I had to pick my favorite for the next 12 to 24 months, it would be gold. If it goes to $1400, it goes to $1700 rather quickly. When you break something like that [the 75-year expansion of globalization and trade], a lot of times the consequences won’t be seen at first. It might be seen one year, two years, three years later. . .  So that would make one think that it’s possible that we might go into a recession or make one think that it would make rates go back toward the zero bound level and of course in a situation like that gold is going to scream.” – Paul Tudor Jones, Bloomberg interview 6/12/2019

Chart of the Day

Chart note:  Quietly, while hardly anyone was watching, money supply momentum has turned suddenly to the upside. Whether or not it will last or translate to even a minor bump in inflation, remains to be seen.  At the very least, though, the spike higher since the end of the first quarter is likely be seen as a welcome development at the Marriner Eccles building.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold, silver surge on trade war escalation, reaches new highs in five of eight top economies

(USAGOLD – 9/3/2019) – Gold surged higher in overseas markets last night as investors reacted to yesterday’s escalation in U.S.-Chinese trade war. A Bloomberg report that the two countries are struggling to schedule talks added to the sense of uncertainty. A weakening British pound kept the price moving in a northerly direction during European trading hours. That strength carried over to the COMEX open where the metal is now trading at $1537 – up $10.50 on the day.  Silver is up a strong 34¢ at $18.74. Four pressing concerns continue to drive demand for the metals in both paper and physical forms – recession fears, plunging interest rates, the U.S.-China trade war, and competitive currency devaluations (Please see our Chart[s] of the Day below).

“I believe that investors should allocate about 10% of their assets in gold – physical gold,” said Mark Mobius of Mobius Capital Partners in a NewsMax interview over the weekend. “The reason is that gold maintains its status as a currency – a currency that has stood the test of time. There is a growing realization that the supply of fiat money is growing at a rapid pace not only because of central bank activities to drive down interest rates by printing more money but also because of the rapid and inexorable rise of cryptocurrencies. . .They are beginning to realize that fiat currencies like the U.S. dollar and euro really do not have anything behind them except the faith of the public.”

Quote of the Day
“What a difference a few years makes. Back in the summer of 2015, a WSJ op-ed writer,  who somehow was unaware of the past 6,000 years of human history, infamously and embarrassingly said ‘Let’s Be Honest About Gold: It’s a Pet Rock.’ Fast forward to today, when with every central bank once again rushing to debase its currency in what increasingly appears to be the final race to the debasement bottom, when even BOE head Mark Carney recommends that it is time to retire the dollar as the world’s reserve currencypet rock gold has emerged as the second best performing asset of the year… and at the rate it is going – 4th in 2017, 3rd in 2018, 2nd in 2019 – gold will be the standout asset class of 2020.” – Tyler Durden, ZeroHedge

Chart of the Day






Charts courtesy of TradingView.com

Chart note: Today’s Chart[s] of the Day update the same posted in the August edition of News & Views, USAGOLD’s monthly newsletter.  In five of the top eight economies – the United Kingdom, Japan, Canada, Australia, and India – gold is priced at all-time highs. In short, as currencies race for the bottom, gold is racing to the top. “The true hallmark of a bull market in gold,” says veteran technical analyst John Murphy, “is its ability to rise relative to other major currencies. And it’s doing just that.”

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold subdued today but up 7.9% for August and 19% on the year

(USAGOLD – 8-30-2019) – Precious metals are a bit subdued as we bring the week and month to a close.  Gold is down $2 at $1527.  Silver continues to outshine the yellow metal – up 9¢ at $18.40. Gold is up 7.9% for August and 19% on the year. Silver is up 13.1% on the month and 19.1% on the year. (For a performance comparison for the past three months, please see our Chart of the Day directly below.) The Reserve Bank of India reports increasing its gold holdings by 51.93 in the 12-month period through June – a 9.2% gain. India’s purchases are part of an overall trend among central banks to build reserves in the precious metal.

Jim Bianco, macro-strategist at Bianco Research sees opportunity in gold both over the longer term and even before the end of the year. “[I]f rates continue to move lower and negative debt continues to grow, that will be a positive factor for gold and gold will continue to catch a bid. For 5000 years, the problem with gold was that it yields nothing. Today, gold is the high yielding alternative in a world with negative interest rates. As long as we don’t see a bottom in the global economy, no immediate resolution to trade, and the Fed doesn’t get aggressive, I could see the gold price hitting $1700 or $1800 in the fourth quarter and maybe even making a run at the all-time high of $1900 before the end of the year.”

Quote of the Day
“Cash over the long run is the worst-performing asset class and therefore the riskiest asset class. So where do you go? To me, going to any one asset increases risk. So the best way to deal with the challenging environment I foresee is by diversifying well. . . [G]old is just an alternative currency to fiat paper currencies. If your portfolio is likely to perform poorly in the adverse environment I’ve been describing—less effective monetary policy, the need to run larger fiscal deficits and monetize them, and challenging politics—the behavior of gold as alternative cash has some diversifying merit.” – Ray Dalio, Bridgewater Associates (Please see Paradigm Shifts)

Chart of the Day

(3-month futures, percent change)Chart courtesy of BarChart.com • • • Click to enlarge

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold pushes higher after quiet night overseas, Dalio says current period like 1935-1945

(USAGOLD – 8/29/2019) – Gold recalibrated after a quiet night overseas to post a gain as trading opened in New York today. The metal is trading at $1544.50, up $5.50 on the day. Silver continued to shine – up 28¢ at $18.63. Oddly, the news headlines paint a picture that typically would put a damper on safe-haven demand. China’s Ministry of Commerce said that it would not retaliate against the latest round of tariff increases. Secretary of State Steven Mnuchin said the United States would not intervene in FOREX markets to push the dollar lower. Bond yields are also higher this morning. After so many disappointments and let-downs over the past several months, perhaps investors are reading through the headlines and continuing to hedge their bets.

Bridgewater’s Ray Dalio is one among many acting on that sentiment. Bloomberg quotes him today as saying that the ability of central banks to reverse an economic downturn is coming to an end – that the last time we faced a market dynamic like today’s was in the period 1935-1945. Dailo, as many of our readers already know, advocates a strong portfolio position in gold for what he calls a “paradigm shift” in global markets.  “I think these are unlikely to be good real returning investments,” he said in a recent Linked In essay, “and that those that will most likely do best will be those that do well when the value of money is being depreciated and domestic and international conflicts are significant, such as gold.”

Quote of the Day
“Rather than let the market adjust itself, government typically starts the process all over again with a new and larger ‘stimulus package.’ The more often this happens, the more ingrained become the distortions in the way people consume and invest, and the nastier the eventual depression. This is why I predict the Greater Depression will be … well … greater. This is going to be one for the record books. Much different, much longer lasting, and much worse than the unpleasantness of 1929-1946.” – Doug Casey, International Man

Chart of the Day

Chart note: We faithfully reproduced this chart developed by UK’s Colin Seymour in 2001. Posted originally at the USAGOLD website, Seymour’s chart on the 1929 stock market crash and the annotations that went with it caused quite a stir on the internet at the turn of the century and the early stages of gold’s secular bull market. It is still widely referenced and linked on the world wide web. We recently reposted the study as part of a site-wide upgrade to current internet presentation standards. It is as relevant to investors today as it was in 2001. Here is the link to the original article titled Pompous Prognosticators.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold surges in pound sterling, silver outperforms second straight day

(USAGOLD – 8/28/2019) – Gold was down about $10 in the overnight market when news began to filter out of the UK that Prime Minister Boris Johnson had asked Queen Elizabeth to suspend Parliament. At that, it promptly reversed course and is now down $2 on the day at $1544. Silver is outperforming its more closely watched companion for the second straight day. It is up another 20¢ at $18.39. Johnson’s suspension of Parliament – seen as an attempt to sideline opposition to the October Brexit deadline – sent the pound reeling. Gold responded by rising £17 to £1267 – an all-time high in sterling terms and up 26% since the start of the year.

Citigroup, as reported by Bloomberg (via Yahoo), is out with a technical report this morning that suggests gold “may extend its impressive rally” based on a key gold-S&P 500 ratio. “It is only a matter of time,” says Shyam Devan, the report’s author and senior technical analysts at the bank, “before a significant bullish break occurs that could trigger a rally to the tune of 25% in favor of gold.” If the forecast comes to fruition, it would add about $375 to the current price putting it near all-time highs.

Quote of the Day
“Debasement was limited at first to one’s own territory. It was then found that one could do better by taking bad coins across the border of neighboring municipalities and exchanging them for good with ignorant common people, bringing back the good coins and debasing them again. More and more mints were established. Debasement accelerated in hyper-fashion until a halt was called after the subsidiary coins became practically worthless, and children played with them in the street, much as recounted in Leo Tolstoy’s short story, Ivan the Fool.” – Charles P. Kindleberger, Manias, Panics and Crashes

Chart courtesy of TradingEconomics.com

Chart note: If you follow the on-going trade war between the United States and China with even passing interest, you have no doubt come across references to the prospect of China selling U.S. Treasuries as its ultimate hole card. It is not well-known that China has been unloading exchange reserves since 2014 when its holdings peaked at nearly $4 trillion. Most of those reductions, which have taken China’s reserves to a little over $3 trillion (a 25% reduction) occurred from 2014 to 2017 and came as part of its policy to smooth the yuan exchange rate against the dollar and prevent wholesale capital flight. It is unclear at this juncture to what extent China would be willing to drain reserves in defense of the yuan at this point in time although there are signs now that China might be deploying a similar now. Trading Economics, as the chart shows, projects further reserve reductions.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Silver leads precious metals higher – now near $18 per ounce

(USAGOLD – 8/27/2019) – Precious metals moved higher in overnight markets with silver leading the way – up 29¢ on the day at $17.96.  Gold is up $1 at $1530.  The markets overall are still processing the disappointing results of the two major global get-togethers over this past weekend – the central banker meeting in Jackson Hole and the G-7 meeting in Biarritz. Stepping back, a troubling picture emerges of global leaders hard pressed to find workable solutions for the problems at hand.

CityIndex‘s Matt Simpson believes falling interest rates will be the major impetus for gold as we move into the last third of 2019. “It goes without saying,” he says, “that gold has had a stellar couple of months and, given the backdrop of global negative yields and the potential for a Fed easing cycle (even though they currently deny this), we expect gold’s trend to push higher as the year develops. Indeed, it was the June Fed meeting which saw gold explode to new highs and break key resistance, which suggests dominant momentum has realigned with its longer-term secular trend. If that is the case, we’d also expect record new highs over the coming years.”

Quote of the Day
“If I had to pick my favorite for the next 12 to 24 months, it would be gold. If it goes to $1400, it goes to $1700 rather quickly. When you break something like that [the 75 year expansion of globalization and trade], a lot of times the consequences won’t be seen at first. It might be seen one year, two years, three years later. . .  So that would make one think that it’s possible that we might go into a recession or make one think that it would make rates go back toward the zero bound level and of course in a situation like that gold is going to scream.” – Paul Tudor Jones, Bloomberg interview 6/12/2019

Chart of the Day


Chart courtesy of HowMuch.net

USAGOLD note:  This chart will come as a surprise even to those who monitor the global economy and financial markets on a regular basis.  Gold is by far the largest form of money in circulation with the dollar and euro a distant second and third.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold trades nearly $25 higher overnight, confusion reigns on renewed trade talks (A sense that the old must give way to the new)

(USAGOLD – 8/26/2019) – Gold traded as much as $25 higher than Friday’s close in Asia late yesterday. It then gave back nearly all that gain after President Trump announced China had contacted U.S. trade representatives to restart trade negotiations. China’s Foreign Ministry says it has no knowledge of any communication.  Gold is now up $3 on the day at $1530. Silver is up 22¢ at $17.61.

Much happened at the central bank and G-7 meetings over the weekend.  None of the highly scrutinized particulars, however, is likely to have a greater effect than a general sense that the old must give way to the new. In a Financial Times report this morning, James Bullard, president of the St. Louis Federal Reserves summed up that sentiment. “Something is going on, and that’s causing I think a total rethink of central banking and all our cherished notions about what we think we’re doing,” he said. “We just have to stop thinking that next year things are going to be normal.”  To which FT adds: “Interest rates are not going back up anytime soon, the role of the dollar is under scrutiny – both as a haven asset and as a medium of exchange – and trade uncertainty has become a permanent feature of policymaking.” That about sums it up, and it is a long way from where we were a week ago.

Quote of the Day
“I think these are unlikely to be good real returning investments and that those that will most likely do best will be those that do well when the value of money is being depreciated and domestic and international conflicts are significant, such as gold. Additionally, for reasons I will explain in the near future, most investors are underweighted in such assets, meaning that if they just wanted to have a better balanced portfolio to reduce risk, they would have more of this sort of asset. For this reason, I believe that it would be both risk-reducing and return-enhancing to consider adding gold to one’s portfolio.” – Ray Dalio, Bridgewater Associates [Paradigm Shifts]

Chart of the Day

Chart note:  It has been a good year thus far for gold and silver.  Gold is up 19%  since the beginning of 2019 and silver 13%.  Silver is still in catch-up mode with its ratio to gold now sitting just under 88 to one. This chart reflects London pricing and does not include Friday’s strong U.S. close near $1527 for gold and $17.40 for silver.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold moves higher on China-imposed tariffs, awaits Fed chairman’s remarks

(USAGOLD – 8/23/2019) – Gold seesawed around the $1500 mark overnight then suddenly moved higher after China announced a new round of tariffs on U.S. imports. It is now up $6 at $1505. Silver is up 7¢ at $17.11. Fed Chairman Powell will deliver his much-anticipated speech later today. A chairman who often portrays himself as representing the consensus, he is now faced with the difficult task of characterizing the policies of a sharply divided FOMC. A CNBC headline this morning sums up his dilemma: Fed’s Powell will find it hard not to rock markets with his comments Friday.

We might be in for an interesting day. . . .

Quote of the Day
“Most of these people [living in emerging nations] don’t really understand what is happening outside their boundaries, so they have no option but to buy gold, silver, and currencies of Western countries. And that is why I think support for precious metals will continue to increase going forward. I don’t know what influence it will have in pricing, but really, if I had to suggest to someone on how to preserve his wealth, my suggestion would primarily be focused on gold and silver.”Jayant Bhandari (StreetWise Interview with Maurice Jackson)

Chart of the Day


Chart note: Since the turn of the new century, gold consistently provided a real rate of return on investment when measured against inflation. In fact, it provided a real rate of return in twelve of the nineteen years represented on the chart. The period was one of subdued inflation. Gold’s performance, as a result, took many analysts and professional money managers by surprise and altered the perception among money managers that the precious metal is solely an inflation hedge.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold pushes south of $1500, awaits Powell speech tomorrow

(USAGOLD – 8/22/2019) – Gold pushed south of the $1500 mark in today’s early trading as financial markets pretty much went on hold in anticipation of Fed chairman Powell’s speech tomorrow.  Gold is down $6 at $1496.50.  Silver is down 9¢ at $17.05.

As mentioned here last week, it wasn’t all that long ago that calls for $1500 gold were greeted with a considerable amount of skepticism. Now with $1500 gold a reality, some analysts are eying the potential for gold reaching another milestone – $2000 per ounce. In a recent CNBC interview, TD Securities’ Daniel Ghali and Bank of America Merrill Lynch’s Michael Widmer both said $2000 gold could materialize the result of unconventional, aggressive easing on the part of central banks. In a Bloomberg interview, BOAML’s chief technical analyst, Paul Ciana, outdoes them both by forecasting the yellow metal could “go as high as $2300 per ounce” in the years to come based on technical wave structure analysis that had its beginnings in the 1970s.

In the shorter run, however, some analysts, like ABN Ambro’s Georgette Boele, believe that we will see gold correct from these levels. Boele’s call for a correction is taken seriously in some quarters because she was early in forecasting gold’s strong performance this year.  With a formidable list of uncertainties hanging over financial markets these days, any downside, should it materialize, is likely to be tempered by those who see it as a buying opportunity.

Quote of the Day
“One of the most important warnings offered by firefighters is simple: get out early. In the face of wildfires, some homeowners get the idea of staying in their homes and riding it out. As one firefighter warned ‘The point is to go.’ But if you don’t, it’s better to stay than to panic and run in the midst of a firestorm of smoke and embers. It’s not the fire that gets you. It’s the heat. Even before the flames reach the house, it can be fatal to stand outside trying to protect what you have (h/t John Galvin). Similarly, our ‘Exit Rule for Bubbles’ is straightforward: You only get out if you panic before everyone else does. You have to decide whether to look like an idiot before the crash, or look like an idiot after it.”John Hussman, Hussman Funds

Chart of the Day

Click to enlarge

 

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold drops back to $1500 level in advance of Fed chairman’s Friday speech

(USAGOLD – 8/21/2019) – Gold dropped marginally in today’s early going and is now hovering again near the $1500 mark – down $5.50 on the day.  Silver is down 2¢ at $17.10.  The markets in general might take a breather for the next couple of days in anticipation of Fed chairman Powell’s address to open the central bank’s Jackson Hole conclave on Friday. Some see the speech as an opportunity for the chairman to make amends for his ‘midcycle adjustment’ statement at the end of July and perhaps open the door for a series of rate reductions. President Trump elevated pressure on the Fed to reduce rates likening the Fed chairman to “a golfer who can’t putt.”

A CNBC article by Patti Domm published this morning examines some of the problems associated with declining yields and the possibility of negative interest rates in the United States. “It’s very depressing. . .Just think about it as a saver or investor,” says Michael Schumacher, director of rates at Wells Fargo. “It’s very hard to wrap your arms around the idea of negative yields. It doesn’t really sit well…It’s terrible for the financial system. Look how European banks have done for the last six, seven years—very poorly.”

Declining and negative rates have reignited gold demand around the world. ETFs, the favored gold ownership vehicle for funds and institutions, have seen their stockpiles grow by nearly 20% just since June. Private investors, many of whom favor more direct ownership in the form of coins and bullion, have lagged their institutional brethren. That tardiness, though, seems to be in the process of turning around. Over the past few weeks, demand has picked up at USAGOLD and website traffic has increased 40% over the past 90 days.

Chart courtesy of GoldChartsRUs/Nick Laird

Quote of the Day
“I have a theory that computers started to suck when dumb people started to use them. The same is also true of precious metals, which turned into a speculative football in 2011. Those geeks are gone, and only the die-hards are left — the shiny rocks passed from weak hands to strong hands.” – Jared Dillian, NewsMax Finance

Chart of the Day

Chart note:  When the yield curve temporarily inverted last Wednesday, the Dow Jones Industrial Average plunged 800 points.  Peter Fisher, formerly head of fixed income at BlackRock and currently a professor at Tuck School of Business at Dartmouth, put it succinctly in a Financial Times editorial July of this year. “The mistake,” he says, “is to think it [an inverted yield curve] is a predictor of recessions. I think it causes recessions.”

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold, silver traders and speculators buy the dip

(USAGOLD – 8/20/2019) – Traders and speculators bought the dip overnight sending both gold and silver higher in overseas markets. That momentum carried over to the open in New York where the yellow metal is now trading at $1504 – up $8 on the day.  Silver is up 14¢ at $17.03.  Both metals seem to be gathering support at key levels, i.e., the $1500 and $17 marks respectively.  Four pressing concerns are driving demand for the metals in both paper and physical forms at the present – recession fears, plunging interest rates, the U.S.-China trade war, and competitive currency devaluations.

“What comes next?” asks Financial Times’ Rana Foroohar in a recent opinion piece. “The answer, I believe, is very likely to be a synchronised global recession, punctuated by a step-by-step market downturn — one in which there may be the odd rally, but the general direction is down. This could last for some years. In the next few weeks, I would expect new lows in bond yields, a deepening of the yield curve inversion, higher prices for ‘safety’ assets like the yen and swiss franc, and a continued bull market in gold.”

Quote of the Day
“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” – Ernest Hemingway

Chart of the Day

Chart courtesy of TradingEconomics.com

Chart note: Sudden devaluations can wreak havoc on economies and financial markets.  Financial Times reports that, because of the recent plunge in the Argentina peso last Monday, prices on Volkswagons would rise 15% by the following Friday. An Argentinian who owns a bakery in Buenos Aires is quoted as saying: “We may be used to these blows, but we are never ready for them.”

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold down this morning on reduced recession worries

(USAGOLD – 8/19/2019) – Gold’s descent began during European trading hours as yields on U.S. Treasury paper firmed – a sign that recession worries are on the wane at least for the moment. It is down $15 at $1498.  Silver is down 16¢ at $16.96. Market attention will shift this week to the Federal Reserve’s annual conclave in Jackson Hole with chairman Powell scheduled to speak on Friday. “Fed watchers,” reports Bloomberg, “expect Powell to do nothing on Friday to disabuse investors of the widespread perception that the central bank will reduce interest rates by another quarter of a percentage point next month. But whether he’ll open the door to a half-point cut, which some traders are looking for, is unclear.”

Deutsche Bank was out with a longer-term positive forecast for gold over the weekend. “We have increased our gold and silver price forecasts,” it said in a research report released yesterday, “for the next six quarters to reach a level of $1,575/ounce based on our updated view of the macro, including what we see as the primary drivers of gold: real interest rates, the equity risk premium, the US dollar, and central bank purchases. We have shown macro scenarios that could result in gold going above $1,700/ounce.”

Quote of the Day
So why not own something that yields nothing that holds its value than something that yields negative that doesn’t hold its value. So it is ridiculous not to own gold if you’re from any country on earth except for maybe the United States.” – Jim Cramer, CNBC

Chart of the Day

Chart courtesy of HowMuch.net

Chart note:  “The United States,” says HowMuch, “is still the world’s largest economy, contributing 23.9% to GDP. China, the world’s second largest economy, had its slowest quarterly GDP growth in nearly 30 years. Half of economists in a recent poll have predicted an economic slowdown in the U.S. within the next year. Unresolved trade tensions between the U.S. and China have investors on edge about global economic growth.”

The World’s 10 Largest Economies by GDP
Unted States – $20.49  trillion (23.89%)
China – $13.61  trillion (15.86%)
Japan – $4.97  trillion (5.79%)
Germany – $4 trillion (4.66%)
United Kingdom – $2.83  trillion (3.29%)
France – $2.78  trillion (3.24%)
India – $2.73  trillion (3.18%)
Italy – $2.07  trillion (2.42%)
Brazil – $1.87  trillion (2.18%)
Canada – $1.71  trillion (1.99%)

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold trades to downside on quiet news day, finds support at $1507

(USAGOLD – 8/16/2019) – Gold is trading to the downside this morning in a move that began during Asian trading hours.  It is now priced at $1510 – down $16 on the day.  Silver is down 12¢ at $17.17. With little in the way of market altering news this morning, analysts might be tempted to attribute the move to technical signals and the fact that gold simply needs to correct after the powerful rally of the past several weeks. On the other hand, we have seen considerable buying and short covering on the dips during this rally based on longer-term economic fundamentals.  Earlier today, gold found support at the $1507 level.

London-based Edison Investment Research recently published a comprehensive review of the prospects for gold based on a number of economic criteria and scenarios.  Among the conclusions drawn in this lengthy study, it offers the following under a section headlined, Historical returns – exploding myths:  “Gold is often thought of as a relatively pedestrian real asset, the returns from which are equally conservative. In fact, while there are periods in which this may be true, over the long term, gold has proved itself an investment to compete with the best. While the Dow Jones Industrials Average increased by 25.8x from 1967 to 2018, for example, the price of gold has increased by 36.3x.” Edison goes on to say that average annual returns over the period were 9.6% for gold while stocks averaged 6.6%. “That,” says the research group, “is a pretty impressive performance for an asset that is often characterised as a portfolio diversifier or insurance policy.”

Quote of the Day
“The world clings to its old mental picture of the stock market because it’s comforting; because it’s so hard to draw a picture of what has replaced it; and because the few people able to draw it for you have no interest in doing so.” ― Michael Lewis, Flash Boys

Chart of the Day

Chart note:  The U.S. federal government added $1.481 trillion to the national debt in 2018, the third-largest increase on record.  The Republicans do not talk about the deficits because it is an embarrassment.  The Democrats do not talk about the deficits because they do not want to draw attention to the uncontrolled spending debt issuance to sponsor government social programs.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

Gold at low end of seesaw market action this morning

(USAGOLD – 8/15/2019) – Now down $5 on the day at $1512, gold is on the lower end of a seesaw performance that began in overnight trading and carried over to the open in New York. Silver is off 6¢ at $17.18. The markets, in general, seem to be taking a bit of a breather after yesterday’s strong reaction to the rate inversion in two and ten year Treasury debt. Overall, the same four horsemen threats of recession, plummeting yields, currency depreciation, and stock market instability continue to drive interest in gold and silver and bolster global demand.

It wasn’t all that long ago that calls for $1500 gold were greeted with a considerable amount of skepticism. Now with $1500 gold a reality, some analysts are eying the potential for gold reaching another milestone – $2000 per ounce. In a recent CNBC interview, TD Securities’ Daniel Ghali and Bank of America Merrill Lynch’s Michael Widmer both said $2000 gold could materialize the result of unconventional, aggressive easing on the part of central banks. In a Bloomberg interview yesterday, BOAML’s chief technical analyst, Paul Ciana, outdoes them both by forecasting the yellow metal could “go as high as $2300 per ounce” in the years to come based on technical wave structure analysis that had its beginnings in the 1970s.

Quote of the Day
“Why does the cycle move as it does? What causes these periodic alternations, this ebb and this flow, in the national priorities? If it is a genuine cycle, the explanation must be primarily internal. Each phase must flow out of the conditions – and contradictions – of the phase before and then itself prepare the way for the next recurrence. A true cycle is self-generating. It cannot be determined, short of catastrophe, by external events. Wars, depressions, inflations may heighten or complicate moods, but the cycle itself rolls on, self-contained, self-sufficient and autonomous. . .The roots of cyclical self sufficiency lies deep in the natural life of humanity. There is a cyclical pattern in organic nature — in the tides, in the seasons, in night and day, in the systole and diastole of the human heart.” – Arthur M. Schlesinger, Jr., The Cycles of American History

Chart of the Day

Chart note:  This chart depicts U.S. government receipts and expenditures from 1950 to present.  Note the growing gap between incoming and outgoing – the difference for the most part filled by additions to the national debt.  Given the established trend, that gap in all likelihood would have continued widening without the imposition of the new tax reduction program and simultaneous growth in government spending.  With tax reductions now in place, the distance between the two lines is likely to widen even further.  This is the second last installment in our series on the national debt.  Tomorrow, we will post the final entry.

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |

European traders push gold higher on recession concerns, yield curve inversion

(USAGOLD – 8/14/2019) – Gold reversed yesterday’s downside drift to post a $14 gain in today’s early going.  It is now solidly over the $1500 mark again at $1515.  Silver likewise advanced with some conviction over the $17 mark. It is now trading at $17.25 – up 27¢  on the day. It looks like we are beginning to see some buying/short covering on the dips – a healthy sign for establishing $1500 and $17 as possible support levels.

In past DMRs we have made note of the changing dynamics in the daily (24 hour) pricing of gold. It used to be that European and Asian markets took their cue primarily from U.S. trading and generally fell in line.  Now Asian and European traders are increasingly having a say in the daily price trend as demand ratchets up globally (something we covered in the latest issue of News & Views).  Last night it was Europe leading the way on data showing a slowdown in Germany’s economy.  Adding to building recession concerns, the yield curve on the ten and two year U.S. Treasuries inverted – a signal in the past that a recession might be imminent. (See chart below.)

“Is this time any different?” asks Sharps Pixley’s Lawrie Williams.  “Maybe! Some strong pro-gold statements have been flowing from some of the most successful investors/hedge fund managers out there – notably Ray Dalio who heads up the biggest hedge fund of all in Bridgewater Associates, Paul Tudor Jones and Stan Druckenmeyer, all of whom rate among the world’s top fund managers and have strong followings. They have all recently spoken extremely positively about gold investment. Anecdotally, George Soros who also has a major investor following, has made a very substantial investment in the yellow metal as well.” Soros is a new addition to the list of billionaires who have gravitated towards gold over the past several months.

Quote of the Day
“And there’s an obvious reason for China to buy gold. It wants to break up the global hegemony of the U.S. dollar — the hegemony that former French President Charles de Gaulle called America’s ‘exorbitant privilege.’ It wants to make its own currency, the renminbi, a world player. And [Odey Asset Management’s Crispin] Odey argues that buying gold bullion is a natural move. Gold reserves should add to world confidence in the Chinese currency.” – Brett Arends, MarketWatch

Chart of the Day

Chart note: “Now, clear your eyes and look again,” says Elliot Wave analyst Avi Gilburt. “Can it be possible? Can you believe your lying eyes? Yes, my friends. Both gold and the dollar have been in an uptrend since the fall of 2018 despite all the noise you hear that this is simply not possible. But, how dare you think for yourself and ignore what everyone ‘knows’ is true about the metals complex? Yet, if you read almost any metals article, they will tell you the exact opposite of what your lying eyes are telling you.” Gilburt raises an interesting point.  Take this analysis one step further and ask yourself what the algo-writers might be doing this moment as they digest the reality “of what your lying eyes are telling you.”  Time to rewrite the programs, it would seem. . . . . .

Posted in Daily Market Report, dailyquotes, Today's top gold news and opinion |